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Shadow Bank Loans From U.S. Lenders Surpass $1 Trillion In Fed Data

The amount that US banks have loaned to so-called shadow banks surpassed the $1 trillion mark even as regulators warn of potential risks to the financial system, according to Federal Reserve data.

<div class="paragraphs"><p>Source: Unsplash</p></div>
Source: Unsplash

The amount that US banks have loaned to so-called shadow banks surpassed the $1 trillion mark, according to Federal Reserve data, even as regulators warn of potential risks to the financial system. 

The Fed reported Friday that lenders crossed the threshold in loans outstanding to non-deposit-taking financial companies such as fintechs and private credit investors at the end of January. The figure was about $894 billion a year earlier, the data show. 

Read more: US Lays Path for More Financial Giants to Get Fed Oversight

Treasury Secretary Janet Yellen said this week that US regulators are monitoring risks stemming from nonbank mortgage lenders, and cautioned that a failure is possible if the market strains.

Regulators have been warning that oversight hasn’t kept pace with the significant expansion across finance of nonbanks’ footprints. Unforeseen risks may be lurking as the firms have grabbed more market share, while their ties to traditional lenders have become more complex, officials have said.

The Financial Times reported the figure earlier Saturday.

--With assistance from Katanga Johnson.

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